Download Manufacturing License - Exclusive

Manufacturing License Agreement
Exclusive
Use this contract template to develop your agreement for product Manufacturing whether you are
the distributor or the manufacturer.
Manufacturer is not the exclusive producer of product (can be if you are the manufacturer and
negotiate for exclusivity), but you can have other manufacturers under contract.
The idea is that the manufacturer will not produce your product(s) for anyone else.
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[Company Legal Name]
[Address] * [City], [State] [Zip Code]
[Telephone] * [WebSite Address]
Cover Letter
[Date]
[Name]
[Title]
[Manufacturer]
[Address]
Dear [First Name],
Thank you for your interest in manufacturing our products. We are looking forward to working with you.
Attached is our “Manufacturing License Agreement” in order to establish the terms and conditions of our
manufacturing relationship. The following is a synopsis of what our agreement says:
We want you to manufacture our products exclusively for us as well as fully protect our intellectual
property.
We are not related in any way except that you produce our products.
We will keep each other’s secrets confidential.
We will use binding Arbitration in the event of a dispute and live with the arbitrator’s decision whether
we like it or not—we agree that we both want to prevent any dispute from escalating to an expensive
court battle.
We own our trademarks, but you can use them under certain conditions.
If we change any arrangements we do it in writing and it becomes part of this agreement.
There are some time limits for working out any problems, and we can end our relationship if we can’t
work it out.
This is our entire deal with each other. We won’t break any laws. We’re off the hook in the event of an
“Act of God.”
The usual general contract stuff.
Thank you for doing business with [Company]. If you have any questions, please feel free to contact me.
We look forward to a profitable relationship together.
Sincerely,
[Owner/Founder]
[Title]
Enclosure: Manufacturing Agreement
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Manufacturing Agreement
This is a standard introductory paragraph that lists the parties to the Agreement and the date the
Agreement is being entered into. You need to enter the date of the Agreement, the names of the
parties, the specific type of organization, and their addresses.
The Effective Date of this Agreement: [Date]
This Agreement is by and between
[Manufacturer’s Full Legal Name]
([Manufacturer’s abbreviated name]),
a
[State], [Corporation / Partnership / Sole Proprietorship]
with its principal place of business at
[Manufacturer’s Address],
AND
[Company Full Legal Name],
([Company]),
a
[State],[Corporation/Partnership/Sole Proprietorship],
with its principal place of business at
[Address]
[City], [State] [Zip Code]
Summary
The following section is like an introduction. It states that [Company] is in the business of
developing, marketing and supporting certain products and that since [Manufacturer] has the ability
to manufacture those products and will do it exclusively for [Company], [Company] is willing to
purchase from [Manufacturer].
[Company] is in the business of developing, marketing and supporting certain products (defined below).
[Manufacturer] wishes to provide manufacturing services for these products and assures [Company] that
it has the facilities, personnel, and technical expertise necessary to effectively and properly manufacture
the products.
You should indicate if [Manufacturer] can produce the products only for you.
[Manufacturer] is willing to assure [Company] that [Manufacturer] will produce the “Products”
exclusively for [Company].
In consideration for the mutual promises, covenants, and Agreements made below, the parties, intending
to be legally bound, agree as follows:
1.
Definitions
For purposes of this Agreement, the following terms will have the indicated definitions:
“Agreement.” This Agreement is by and between [Company] and [Manufacturer].
“Information” The documentation, technical information and / or business information, either oral or
written that [Company] or [Manufacturer] furnishes to the other marked as proprietary or confidential
or simply treated as such by the disclosing party. The Information includes research, development or
business activities, including any unannounced products and services, as well as any information
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relating to services, developments, services, processes, plans, financial information, customer and
Supplier lists, forecasts and projections. Information shall also include the terms of this Agreement. A
party’s information shall be deemed confidential under this Agreement unless the information:
is in the public domain through no act of other party;
is lawfully known by the other party from a source other than the first party with no restriction of
confidentiality; or
must be disclosed by requirement of law or generally accepted accounting principles.
“Term” The duration of this Agreement.
Below, describe as fully as possible all of the products to be supplied to [Manufacturer]. (For
example, “the 6-string electric guitar called the “Mojo Shredder”, the 5-string electric bass called
“Swamp Stomper 5”) Of course you will add more detailed product descriptions and specifications in
the Exhibit A.
“Products” The [Describe the products] developed or owned by [Company], along with all options to
the products; all future versions of the products; and all enhancements, revisions, derivative works
and/or modifications made to the products by [Company]. Full manufacturing specifications in Exhibit
A attached.
“End-User” Any person or entity who ultimately obtains the product..
“Quota” Specified minimum quantities of the products as set forth in Exhibit C (attached to the end of
this Agreement) consisting of an initial purchase order and a continual minimum monthly volume
commitment.
“Trademarks” The Trademarks specified in Exhibit D (attached to the end of this Agreement).
“Intellectual Property Rights” The intangible legal rights or interests evidenced by or embodied in
any idea, design, concept, technique, invention, discovery, or improvement regardless of patentability,
but including patents, patent applications, trade secrets and know-how; any work of authorship,
regardless of copyright-ability, but including copyrights and any moral rights recognized by law; and
any other similar rights, in each case on a worldwide basis.
2.
Term
You must establish duration of the agreement – it cannot be open-ended. Note that you can always
renew this or any other Agreement upon the mutual consent of the parties.
This Agreement shall commence on the Effective Date above and shall terminate [Month, Day, Year]
following the Effective Date, unless it terminates sooner according to the provisions of this Agreement.
The Parties may renew this Agreement in writing upon mutual Agreement.
There are certain clauses in this Agreement that you will want to continue (referred to as survive)
the actual termination of the Agreement. For example, while the Agreement may terminate,
warranties regarding the products would still be effective, depending on how you wrote the
Agreement.
See also the “Agreement Extension”
2.1 Continuation or Survival of Certain Sections
Certain sections, as indicated below, will survive and remain effective even after the termination of this
Agreement. All other rights and obligations of each party to the other shall terminate upon the
termination of this Agreement.
3.
Relationship
3.1 Exclusive Customer
[Company] grants [Manufacturer], and [Manufacturer] accepts from [Company], an irrevocable, nontransferable, right and license to manufacture the Products exclusively for [Company]. This appointment
is subject to the limitations set forth in Section 4.
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This next section makes clear that neither [Company] nor [Manufacturer] is authorized to act on the
other's behalf and that each is an independent contractor acting on its own behalf. It is important for
this to be stated since it might appear that one is an agent for the other, when, in fact, neither wants
the other to be able to bind it to contracts or otherwise create legal liabilities.
3.2 Independent Contractors
[Company] and [Manufacturer] agree that their relationship is that of the buyer and the seller (or the
licenser and the licensee) and not that of joint venturers, principals or agents, or franchiser and
franchisee. Both are independent contractors acting for their own accounts, and neither is authorized to
make any commitment or representation, express or implied, on the other’s behalf unless authorized to do
so by the other in writing.
Section 3.4 says that while [Manufacturer] may use [Company]'s trademarks and trade names, it
has no legal right or interest in that property. Furthermore, [Company] may set forth specifics
regarding their use in writing, and [Manufacturer] must conform its use accordingly.
3.3 Use of Trademarks & Trade Names
No right, title or interest in or to any trademarks, trade names, slogans, labels and designs used by either
[Company] or [Manufacturer], nor the goodwill connected, is conveyed by this Agreement.
4.
Manufacturer’s Rights & Responsibilities
You may or may not want to give the manufacturer any exclusivity; however, there may be a
considerable investment in tooling required to produce your products and the manufacturer wants to
have their investment protected.
In recognition of the investment to be made by [Manufacturer] in connection with its manufacturing of
the products, the parties agree to each of the following provisions:
The following section details exactly what is meant by “exclusive” in this exclusive Agreement.
4.1
Exclusivity
Except as specifically explained below, [Manufacturer] is the only entity that will distribute the
products anywhere in the world.
4.1.1 [Company] hereby grants [Manufacturer] the exclusive right to manufacture the products, subject
to the limitations below and in Section 4.1.2.
It is rumored that some manufacturers make extra copies to be sold out their back door – perhaps
you’ve seen the bootleg videos, software and other products for sale on the streets of certain
countries…
4.1.3 [Manufacturer]’s obligations with respect to Section 4.1.2 shall be limited to refraining from
intentionally selling Product to any entity other than [Company].
4.2
Modifications
You should change this if you want [Company] or [Manufacturer] to have greater rights with respect
to modifications.
Section 9.2 not only prohibits [Manufacturer] from making changes to the products.
[Manufacturer] shall have no right to modify any of the Products, and may not combine such with other
products or material to form derivative works. All rights in improvements made by [Company] shall be
held exclusively by [Company]; [Manufacturer] may not use, reproduce or distribute [Company]’s
Products or derivative works in any manner except as otherwise expressly provided under this
Agreement.
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4.3
Other Products
The following section prohibits [Company] from selling products that are similar to the products
defined in this Agreement. If [Company] will be able to sell such products, you should say so.
[Manufacturer] shall not produce or sell any products with specifications comparable to those of the
Products described in this Agreement.
4.4 Reports
[Manufacturer] shall deliver to [Company] no later than [000?] days after the end of each month during
the term of this Agreement and for [000?] days thereafter, a written report showing for the preceding
month (1) [Manufacturer]’s current inventory of each product (listed in units); (2) the quantity of each
product shipped into a zip code area; (3) the number of returns of or refunds on products granted; and (4)
other relevant information for the prior month as requested from time to time by [Company].
[Manufacturer] shall cooperate with [Company] to make the format, microcomputer environment, and
coding of its monthly records compatible with [Company]'s record-keeping system.
Section 5.6 requires [Manufacturer] to comply with all applicable laws.
4.5 Compliance with Laws
[Manufacturer] shall comply with all material applicable present and future federal, state, county, local,
and, where necessary, [country name(s)] laws, ordinances and regulations relating to the sale of the
products.
5.
Supplier’s Rights & Responsibilities
Following are two Section 5.1's. Choose the one that fits your needs.
Assuming [Company] will be providing manual(s) to [Manufacturer], you should use the first Section
5.1. If [Company] will not be providing a manual you should select the second one.
For the first insert in the first Section 5.1, indicate how soon after this Agreement is signed that
[Manufacturer] will be required to provide these manuals. For the second insert, you should try to
explain what the manuals will be documenting.
5.1 Service Manual(s)
Within [000?] days of execution of this Agreement, [Company] shall provide [Manufacturer] with
manuals documenting the [appropriate method(s) of servicing / installing / using the products].
~ [Or] ~
5.1 Service Manual(s)
[Company] will not provide any manual(s) regarding the products to [Manufacturer].
5.2
Implementation of Enhancements
Section 6.4 requires [Company] to cooperate with [Manufacturer] in the event that [Manufacturer]
makes any improvements to the products.
[Company] shall cooperate with [Manufacturer] in evaluating, reviewing, and aggressively
implementing enhancements and refinements to the products.
Following are two Section 5.3's. Choose the one that fits your needs.
The first Section 6.5 deals with technical support provided by [Company] directly to [Manufacturer].
If technical support will be provided, define the scope of that support. The bracketed items are to
help you define the parameters of the support. The second section should be used if no support will
be given.
Assuming [Company] will be providing system documentation to [Manufacturer], you should include
the following section. This section not only describes the documentation and designates the number
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to be provided, but it allows [Manufacturer] to reproduce and translate them. If [Company] will not be
providing any system documentation, you should select the second section.
5.3 Technical Support
[Company] shall provide the following technical support during its’ normal business hours:
engineering support at no charge to [Manufacturer]'s engineering personnel in the form of telephone
consultation, and
field support at no charge to [Manufacturer]’s field engineering personnel in the form of telephone
consultation.]
~ [Or] ~
5.3 Technical Support
[Company] shall not provide any technical support to [Manufacturer].
Following are two more similar sections -- Choose the one that fits your needs.
For the first insert, in the first section, indicate the number of copies of the documents [Company]
will be providing. For the second insert, you should try to explain what the manuals will be
documenting. The third insert designates the period of time, if any, following the expiration of this
Agreement that [Company] will be required to provide system documentation.
5.4 System Documentation
[Company] shall provide at no charge to [Manufacturer] [000?] copies of each [technical publication /
document, including without limitation service and installation manuals that [Company] prepares or uses
for the products] during the Term of this Agreement and for [000?] years thereafter. [Manufacturer] may
use and / or reproduce and / or translate such materials, in whole or in part, but shall reproduce and
include any copyright and proprietary notice of [Manufacturer] on all copies of such materials.
~ [Or] ~
5.4 System Documentation
[Company] shall provide no system documentation to [Manufacturer].
Section 6.7 requires [Company] to provide spare parts to [Manufacturer] at its lowest resale price, or
it must find an alternative supply.
For the first insert in Section 6.7, state the period following the expiration date of this Agreement
during which [Company] will be required to continue supplying [Manufacturer] spare parts. For the
second insert describe what the parts will be used for.
5.5 Spare Parts
[Manufacturer] shall, during the Term of this Agreement and for [000?] years thereafter, supply to
[Company] at its most buyer-favorable then-prevailing resale price, or develop a competitively-priced
alternative source of supply for [the use / operation of the products].
6.
Purchase Orders
For the first insert in Section 6, state the quantity and description of the products comprising the
initial order. For the second through tenth inserts, state the delivery schedule. We have broken the
initial order into three separate deliveries, you can increase or decrease this number. For each,
enter the number to be delivered and the month and year that the delivery is to be completed. You
should complete Exhibit G which is a copy of the purchase order for the initial order, and attach it to
the end of this Agreement. The last two inserts give [Manufacturer] the option of increasing the initial
order. If you elect to keep this option, the first insert simply describes the product(s), and the second
insert sets the number it can be increased to. If you don't want this option, delete the sentence.
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6.1
Initial Order
Section 6.1 sets the exact amount and terms for the initial order.
[Company] hereby places, effective upon execution of this Agreement, an initial order attached to this
Agreement as Exhibit D is a copy of the purchase order for the Initial Order.
6.2
Subsequent Orders
All orders following the initial order are referred to as subsequent orders. Section 6.2 states what
[Manufacturer] has to specify when making those orders. It also says that this Agreement governs
those orders, not other purchase orders or documents unless agreed to in writing by the other party.
All subsequent orders shall be in writing or if placed orally, shall be confirmed in writing within [000?]
business days after such oral order. All orders, whether in writing or verbal shall specify:
this Agreement;
the quantity and description of the products;
requested delivery dates
applicable price; and
any special instructions.
All orders shall be governed solely by the terms and conditions of this Agreement. No additional or
different provisions contained in [Company]’s purchase orders, [Manufacturer]’s sales acknowledgments
or any other business forms shall be of any force or effect whatsoever unless agreed to in writing by the
other party.
6.3
Controlling Terms
Unless otherwise agreed to in writing, this Agreement controls all of the terms and conditions of any
sales between [Company] and [Manufacturer], not purchase orders or other documents.
The terms and conditions of this Agreement shall apply to each order shipped by [Manufacturer] under
this Agreement. Any terms or conditions appearing on the face or reverse side of any purchase order,
acknowledgment, or confirmation that are different from or in addition to those required under this
Agreement shall not be binding on the parties, even if signed and returned, unless both parties expressly
agree in a separate writing to be bound by such separate or additional terms and conditions.
6.4
Cancellation of Orders
Following are two Section 6.4.1's. Choose the one that first your needs.
You have two options with regard to [Company] cancellation. The first option is more favorable to
[Company]; the second option allows [Manufacturer] more leeway in canceling its orders.
[Company] cannot cancel the initial order, but it can cancel subsequent orders up to the first period
(entered in the brackets) before the scheduled delivery date. If he cancels between the second and
third number of days before the scheduled delivery date, the cancellation charge equal to the
amount entered in the fourth set of brackets will be charged. There is no charge for cancellations
made more than the number of days entered in the fifth set of brackets.
What happens when an order is canceled and states situations where orders will be automatically
canceled.
6.4.1 [Company] may cancel any order except the Initial Order at any time prior to [000?] days in
advance of a scheduled delivery date, subject to the cancellation charges set forth below. If [Company]
cancels deliveries scheduled between [000?] and [000?] days from the date of cancellation, a cancellation
charge of [xx]% of the cost of those deliveries will immediately be due and payable to [Manufacturer].
Cancellations of deliveries scheduled more than [000?] days from the date of cancellation may be
effected without charge.
~ [Or] ~
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6.4.2 An order may not be canceled by [Company] unless:
[Manufacturer] has failed to ship the order, or any portion thereof, within [000?] days of the date of
[Manufacturer]’s confirmation of such order; and
[Company] provides written notice of such cancellation, and [Manufacturer] acknowledges such
cancellation in writing; and
[Manufacturer] has not yet shipped the order or portion thereof that [Company] desires to cancel.
Under certain circumstances, [Company] can cancel orders even after it has accepted them.
6.5 Manufacturer Cancellation
[Manufacturer] reserves the right to cancel or suspend any orders placed by [Company] and accepted by
[Manufacturer], or refuse or delay shipment thereof, if [Company] fails (1) to make any payment as
provided in this Agreement or in any invoice; (2) to meet credit or financial requirements established by
[Manufacturer]; or (3) otherwise to comply with the terms and conditions of this Agreement.
6.6
Rescheduling of Delivery
Enter the minimum number of days notice required to reschedule a delivery. For the second insert,
set the maximum period for postponing a delivery.
With proper notice, deliveries can be rescheduled at no charge.
At no charge, [Company] may at any time with at least [000?] days’ prior written notice to
[Manufacturer], reschedule and postpone for up to [000?] days the delivery of any products.
6.7
Acceptance Tests
Depending on the nature of the product(s), you may wish to use an acceptance test. If [Company]
will formulate an acceptance test for the products, leave this section in place. Otherwise, you can
delete it. If a product is properly rejected, [Company] must give notice of that rejection to
[Manufacturer] and will not have to pay for that product(s).
[Manufacturer] shall formulate, subject to [Company]’s approval, Acceptance Test Procedures.
[Company] has the right to conduct acceptance tests on any of the products and may reject those that fail
to pass that test. Such rejection shall be evidenced by notice of rejection to [Manufacturer], together with
an indication of the basis for that rejection. [Company] shall have no obligations with respect to any
products properly rejected by it pursuant to this Agreement.
7.
Payment
Indicate when the payment is due. The number of days following the invoice (enter amount in the
brackets). Note, this section gives [Company] a great deal of leeway in changing payment and credit
terms.
7.1 Payment
[Company] shall pay for products within [000?] days after the date of [Manufacturer]”s invoice or on
such terms as may be otherwise specified in [Manufacturer]’s invoice. At [Company]'s option, shipments
may be made on credit terms in effect at the time an order is accepted. [Manufacturer] reserves the right,
upon written notice to [Company], to declare all sums immediately due and payable in the event of a
breach by [Company] of any of its obligations to [Manufacturer], including the failure of [Company] to
comply with credit terms and limitations. Furthermore, [Manufacturer] reserves the right to vary, change,
or limit the amount or duration of credit to be allowed to [Company], either generally or with respect to a
particular order.
7.2
Interest
Insert the monthly interest rate to be applied to delinquent amounts owed by [Company].
Interest shall accrue on any delinquent amounts owed by [Company] for the products at the rate of [x]%
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percent per month, or the maximum rate permitted by applicable law, whichever is less.
7.3
Freight Charges
If [Company] wants to designate a shipping company and / or wants specific insurance coverage, it
should do so in writing for at least the amount of time prior to the scheduled shipment date (enter
the amount of time in the brackets). If [Company] says nothing, [Manufacturer] will do so on its own.
[Manufacturer] may pay freight charges up front and invoice [Company] for any amounts due.
[Manufacturer] shall pay initially the cost of freight and any taxes, levies, duties or fees of any kind,
nature or description whatsoever applicable to the delivery of all products to [Company], and [Company]
shall forthwith reimburse [Manufacturer] for all such sums upon invoice.
7.4
Taxes
So long as [Company] provides tax exemption certificates or licenses to [Manufacturer], it does not
have to pay taxes to [Company].
[Manufacturer] shall not be required to pay taxes for which it provides [Company], by the time of the
submission of its purchase order to [Company], tax exemption certificates or licenses acceptable to the
appropriate taxing authorities.
7.5
Company’s Financial Condition
Section 7.5 is a guarantee of [Company]'s financial condition. It is assuring [Manufacturer] of its
ability to pay for the amount of products on an annual basis (enter amount in the brackets).
[Company] represents and warrants that it is and at all times during the term of this Agreement shall
remain in good financial condition, solvent and able to pay its bills when due. [Company] further
represents and warrants that it has and at all times during the term of this Agreement shall retain the
ability to order and pay for a minimum of $[x] in total annual orders for products. [Company] shall
maintain and employ in connection with [Company]’s business under this Agreement such working
capital and net worth as may be required in the reasonable opinion of [Manufacturer] to enable
[Company] to carry out and perform all of [Company]’s obligations and responsibilities under this
Agreement. From time to time, on reasonable notice by [Manufacturer], [Company] shall furnish
financial reports as necessary to determine [Company]’s financial condition. [Manufacturer] shall have
the right to change its financial requirements at any time.
7.6
Manufacturer’s Financial Condition
Section 7.6 is a guarantee of [Manufacturer]'s financial condition. It is assuring [Company] of its
ability to pay for the amount of products on an annual basis (enter amount in the brackets).
[Manufacturer] represents and warrants that it is and at all times during the term of this Agreement shall
remain in good financial condition, solvent and able to pay its bills when due. [Manufacturer] further
represents and warrants that it has and at all times during the term of this Agreement shall retain the
ability to order and pay for a minimum of $[x] in total annual orders for products. [Manufacturer] shall
maintain and employ in connection with [Manufacturer]'s business under this Agreement such working
capital and net worth as may be required in the reasonable opinion of [Company] to enable
[Manufacturer] to carry out and perform all of [Manufacturer]’s obligations and responsibilities under
this Agreement. From time to time, on reasonable notice by [Company], [Manufacturer] shall furnish
financial reports as necessary to determine [Manufacturer]’s financial condition. [Company] shall have
the right to change its financial requirements at any time.
8.
Shipment, Risk of Loss & Delivery
Section 8 addresses the issue of who bears the risk of loss of the products along with a number of
matters related to shipping. Again, numerous sections are without comments as they are selfexplanatory.
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Following are two Section 8.1's. Choose the one that fits your needs.
Choose the first Section 8.1 if you want [Company] to bear the risk of loss for the products, (until
they are actually delivered to [Manufacturer]). Choose the second Section8.1 if you want
[Manufacturer] to assume that risk.
8.1 Risk of Loss
Except as provided below, title to the products purchased pursuant to this Agreement will pass upon
delivery to [Company]. [Manufacturer] assumes the risk of loss and damage of the products in transit
from [Manufacturer]’s shipping point to the point of destination.
~ [Or] ~
8.1 Risk of Loss
Except as provided below, title to the products purchased under this Agreement will pass upon shipment
to [Company]. [Company] assumes the risk of loss and damage of the products in transit from
[Manufacturer]’s shipping point.
8.2
Packaging
[Company] will provide [Manufacturer] with the products in the Supplier's packaging, so that he
Distributor doesn't have to handle the products directly.
[Manufacturer] agrees to provide appropriate packaging, and similar matters as requested by [Company]
in order to permit the products to be shipped directly into [Company]’s distribution system without
reopening the boxes or otherwise re-handling the finished goods.
8.3
Shipment
[Manufacturer] pays all shipping and associated costs.
All products shall be shipped by [Manufacturer] F.O.B. [Manufacturer]’s point of shipment. Shipments
shall be made to [Company]’s identified warehouse facilities or freight forwarded. Unless specified in
[Company]’s order, [Manufacturer] shall select the mode of shipment and the carrier. [Company] shall be
responsible for and shall pay all shipping, freight, and insurance charges, which charges [Manufacturer]
may require [Company] to pay in advance.
8.4
Direct Shipment
Enter the period prior to shipment that [Manufacturer] must supply [Company] with shipping
instructions.
If you want [Company] to ship directly, leave Section 8.4 in place.
[Company] may request that [Manufacturer] ship directly to any location designated by [Company].
[Manufacturer] agrees to comply with these requests at no additional charge (other than transportation
charges) provided that [Company] furnishes [Manufacturer] with shipping instructions at least [000?]
days prior to shipment.
8.5
Insurance
The insurance reimbursement described here may either be redundant or contrary to Shipment
section above – please adjust accordingly
[Manufacturer] shall procure insurance on behalf of [Company] to cover risk of damage or loss to
shipments while in the warehouse awaiting final delivery to the customers. In connection with the
delivery and/or warehousing of the Products, [Company] may designate in writing, not less than [000?]
business days prior to the shipment date, the carrier for shipment and the amount of insurance and nature
of coverage. [Company] shall reimburse [Manufacturer] for all insurance premiums and transportation
charges incurred by [Manufacturer] in the warehousing of these shipments.
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8.6 Partial Delivery
Unless [Company] clearly advises [Manufacturer] to the contrary in writing, [Manufacturer] may make
partial shipments of [Company]’s orders, to be separately invoiced and paid for when due. Delay in
delivery of any installment shall not relieve [Company] of its obligation to accept the remaining
deliveries, unless canceled pursuant to Section 6.4 of this Agreement.
8.7 Delivery Schedule & Delays
[Manufacturer] shall use reasonable efforts to meet [Company]’s requested delivery schedules for the
products. Should orders for products exceed [Manufacturer]’s available inventory, [Manufacturer] will
allocate its available inventory and make deliveries on a basis [Manufacturer] deems equitable, in its sole
discretion, and without liability to [Company] on account of the method of allocation chosen or its
implementation.
9.
Limited Warranty
This is a general warranty provision that [Manufacturer] agrees to pass on to its dealers / customers;
it basically warrants that the products are not defective and provides recourse in the event that they
are. You may want to replace [Company] with your company's name to avoid any confusion.
[Company] agrees to repair defective products at its manufacturing facility so long as the end-user
returns the product postage prepaid. You may wish to change this.
We have set the duration of the warranty at one year after the product is shipped to the end-user or
eighteen months after shipment from [Company] to [Manufacturer], whichever comes first. You may
wish to modify these periods.
9.1 Warranty to Distributor’s Customers
[Manufacturer] shall pass on to [Company]’s Customers its standard limited warranty for the Products, as
follows:
[One-Year] Limited Warranty
“For one year after the date of shipment to End-user or eighteen months after the date of shipment from
[Manufacturer], whichever first occurs, [Manufacturer] will at its sole discretion, replace, repair or
furnish credit for any product purchased by End-user that, in [Manufacturer]’s judgment, has a defect in
material or workmanship provided the product is returned, transportation charges prepaid, to
[Manufacturer] with [Manufacturer]’s prior permission and return authorization number, and provided
further that the product has not been misused (including electrostatic discharge), improperly operated, or
subject to unauthorized repairs or modifications. This warranty is in lieu of all other warranties,
expressed, implied or statutory, including the warranty of merchantability and the warranty of fitness or
of suitability for a particular purpose and of all other obligations or liabilities on [Manufacturer]’s part,
and [Manufacturer] neither assumes nor authorizes any other person to assume for [Manufacturer] any
other liabilities in connection with the sale of the said Product. If [Company]’s examination does not
disclose a defect in material or workmanship on a product claimed to be defective. The End-user agrees
to pay [Company]’s established charges for unpacking, testing, and repackaging the product for
reshipment to the End-user. This provision states the End-user’s exclusive and sole remedy for breach of
warranty. This provision does not extend the original warranty period of any product that has been
repaired or replaced by [Company].”
This warranty is the only warranty made by [Manufacturer] with respect to the goods delivered under this
Agreement, and may be modified or amended only by a written instrument signed by a corporate officer
of [Manufacturer] and accepted by the End-user.
The products that at the End-user’s request are delivered without complete encapsulation are specifically
excluded from the warranty set out in this Agreement. All such products are sold “as is.”
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9.2 Disclaimer, No Other Warranty
Except for the express warranty set forth above, [Manufacturer] grants no other warranties, express of
implied, by statute or otherwise, regarding the products, their fitness for any purpose, their quality their
merchantability, or otherwise.
9.3 Limitation of Liability
[Manufacturer]’s liability under the warranty shall be limited to replacement, repair or credit for the
customer's purchase price. In no event shall [Manufacturer] be liable for the cost of procurement of
substitute goods by the customer or for any special, consequential or incidental damages for breach of
warranty.
Indicate how long the repairs and warranties are for.
9.4 Repairs are warranted for [000?] days.
9.5 Manufacturer Duties
[Manufacturer] agrees to honor all replacement requests received by [Company] from the Dealers or
End-Users pursuant to the terms of this Agreement pertaining to defective units. [Company] shall instruct
all of its Resellers to submit all replacement requests to [Company], to be forwarded to [Manufacturer].
9.6
Additional Protection
You may or may not want to include the following section that provides additional protection for the
period of time within the number of months entered in the first bracket. The percentage of products
have the same problem, so you would enter the percent in the second set of brackets. For the third
insert, indicate how soon after the discovery of the problem [Manufacturer] is required to give notice
to [Company], and for the final insert indicate how long [Manufacturer] must keep the product before
disposing of it.
If, within any [000?]-month period, [00?]% percent or more of the products, while within the warranty
period specified in this Agreement, exhibit defects of the same kind and nature, and such defects are the
result of faulty design or workmanship on the part of [Manufacturer] or defects in materials arising from
any cause for which [Manufacturer] is responsible, then [Manufacturer] agrees to give compensation, or
render assistance, at [Manufacturer]’s sole expense, to [Company] as specified:
Delivery of replacement products found to be defective to the place designated by [Company];
Field service for the replacement of such defective products or reimbursement to [Company] of
[Company]'s labor costs in replacing such defective products at such rates as may be mutually agreed
upon from time to time; and
Redesign or reprogramming of the products to the extent necessary to cure such defects.
The warranty provided in this section shall be subject to [Manufacturer]’s satisfaction of the following
conditions:
The specifics concerning the failure of the products alleged or found to be defective shall be furnished
to [Company] in writing within [000?] weeks of discovery by [Company] of such defect;
The defects so specified shall be subject to [Manufacturer]'s verification;
Such defective products shall forthwith be returned to [Manufacturer] by [Company], freight payable at
destination, if [Manufacturer] so requests.
9.7
No products alleged or found to be defective shall be disposed of by [Company] for at least [000?]
weeks after [Manufacturer] receives the written details concerning such defects; and
Notice Requirements
[Company] must give [Manufacturer] a written report of claims once every [designated in brackets]
number of months.
[Company] shall provide [Manufacturer] a written report of all warranty claims at least once every
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[000?] months.
9.8 Non-Exclusive Remedy
The remedy stated in this Section 10 constitutes the sole and exclusive remedy of [Company] and, insofar
as this Agreement effectively so provides with [Manufacturer], as well as its successors and assigns, for
any defect or nonconformity in the Products.
9.9 Product Liability
9.9.1 Indemnification
This one is a bit of a mind bender… try to stay with who is who here – and, you may need/want to
reverse a few conditions as needs be.
So you get sued by a customer for product liability, but it’s really the manufacturer you can point the
finger to (and pass the suit through to)… then they must be enabled / allowed to defend themselves
at their expense. You will too, but if they agree to pay any judgment, then most of your costs are
covered..
[Manufacturer] shall indemnify and hold harmless [Company] for damages or expenses resulting from
any claim, suit or proceeding brought against [Company] on the issue of product liability. [Company]
agrees that [Manufacturer] has the right to defend, or at its option to settle, and [Manufacturer] agrees, at
its own expense, to defend or at its option to settle, any claim, suit or proceeding brought against
[Company] on the issue of product liability, subject to the limitations set forth in this Agreement.
[Manufacturer] shall have sole control of any such action or settlement negotiations, and [Manufacturer]
agrees to pay, subject to the limitations of this Agreement, any final judgment entered against [Company]
on such issue in any such suit or proceeding defended by [Manufacturer].
[Company] agrees that [Manufacturer] shall be relieved of the foregoing obligations unless [Company]
notifies [Manufacturer] promptly in writing of such claim, suit or proceeding and gives [Manufacturer]
authority to proceed as contemplated herein, and, at [Company]’s expense, gives [Manufacturer] proper
and full information and assistance to settle and / or defend any such claim, suit or proceeding.
9.9.2 Entire Liability
The foregoing provisions of this Section 10.9 state the entire liability and obligations of [Manufacturer]
and the exclusive remedy of [Company], with respect to any alleged product liability suit related to the
Products or any part thereof.
10. Ownership, Warranty & Indemnification
Section 10 deals with warranties by Supplier to Distributor that it has the right to manufacture and /
or sell the products to Distributor and if it turns out that it doesn't, Supplier agrees to indemnify or
reimburse Distributor for any resulting damages.
[Company] warrants that he has the right to supply the products to [Manufacturer].
10.1 Supplier Ownership Warranty
[Company] represents and warrants to [Manufacturer] that:
the products are the originals with [Company];
[Company] has full power and authority to grant the rights granted within this Agreement to
[Manufacturer]; and
[Company] has not previously or otherwise granted any other rights in the products to any third party
that conflict with the rights in this Agreement granted to [Manufacturer].
the products do not infringe upon any patent, Copyright, trade secret or other proprietary rights of
others;
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In the event that [Company] breaches the warranty described above, [Company] will pay any and all
damages and expenses resulting from that breach.
10.2 Indemnification
[Company] agrees to defend at its expense and hold [Manufacturer] harmless from any claim, demand, or
suit against [Manufacturer] resulting from a breach of any of the warranties set forth above in Section
10.1 and to pay any costs, damages, or expenses (including attorneys’ fees) arising from any such claim,
demand, or suit. [Company] shall have sole control of the defense of such action and all negotiations for
its compromise or settlement. [Manufacturer] shall timely notify [Company] in writing of any such claim,
demand, or suit, and, at [Company]'s request and expense, provide [Company] with all available
information, assistance and authority to enable [Company] to defend the same. [Company] shall
indemnify [Manufacturer] for all such costs, damages, and expenses as they are incurred.
In addition to paying for damages from a breach of this warranty, [Company] agrees to try to obtain
the right to the products so that they are no longer infringing.
10.3 Continued Use
Following notice of a claim or demand or a threatened or actual suit, [Company] shall immediately, at its
own expense, procure for [Manufacturer] the right to continue the use of the products subject to such
claim, demand or suit, or, having failed to obtain such right, replace or modify such products to make
them non-infringing, or, having failed to replace or modify the products, refund to [Manufacturer] the
purchase price of all unsold products. If [Manufacturer] elects to replace or modify any of the products,
such replacement or modification shall substantially meet the performance and interface specifications of
the replaced or modified products.
Even after this Manufacturing Agreement expires or is terminated, these warranties and
indemnification's are still effective.
10.5 Survival of Warranties
The warranties and indemnities stated in this Section 10 shall survive the expiration or termination of this
Agreement.
Section 12 limits the liability of both [Company] and [Manufacturer].
11. Limitation of Liability
The only warranties that [Company] is making are those stated in the two previous sections.
[Company] is specifically disclaiming any other warranties, including all implied warranties of
merchantability.
11.1 Limitation of Liability
The warranties contained in Sections 9 and 10 above are in lieu of all other warranties and conditions
expressed or implied, including, but not limited to, those governing merchantability or fitness for a
particular purpose. In the event that, despite Section 10, [Company] is found liable for damages based
upon any defect of nonconformity in the products, its total liability for each defective product shall not
exceed the discounted price of such defective product.
11.2 Exclusion of Consequential Damages
Neither party will be liable for consequential or indirect damages. An example of consequential
damages would be lost profits when a part failed to work, and that caused the factory to shut down.
In no event shall either party be liable to the other or any dealer or end-user for any indirect, special or
consequential damages including, without limitation, lost profits, costs of delay, any failure of delivery or
liability to third parties arising from any source even if the party had been advised of the forseeability of
the same.
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12. Termination
Section 12 describes situations where this Agreement can be terminated.
Either party can terminate the Agreement if any of the following occur.
12.1 Termination Events
This Agreement may be terminated by either party [000?] written notice or upon the occurrence of any of
the following circumstances:
In the event that bankruptcy proceedings are initiated and not dismissed or stayed within the amount
of time entered in the brackets.
12.1.1 Any assignment for the benefit of the creditors, or any bankruptcy, reorganization, or other
proceeding under any bankruptcy or insolvency law is initiated by the other party, or is initiated against it
and not dismissed or stayed within [000?] days;
Where [Company] or [Manufacturer] is in material breach, the non-breaching party can terminate
the Agreement if the breach is not cured within the period after receiving notice of the breach. Enter
the period of time in the brackets.
12.1.2 A material breach by the other party of any of the terms of this Agreement, which breach is not
remedied by the other party within [000?] days of the other party’s receipt of notice of such breach; or
12.2 Violation of Manufacturer’s Rights
If [Manufacturer] supplies products to others in violation of this Agreement, [Company] may
terminate the Agreement. The Agreement will terminate after the number of days (entered in
brackets) following the mailing of the termination notice.
This Agreement may be terminated by [Company] upon the sale or Manufacturing of the products in
violation of [Company]’s exclusive Manufacturing rights as described in Section 4.1. The Written notice
of termination shall be given by registered or certified mail, in which event this Agreement shall
terminate [000?] days from the date of mailing of the notice.
12.3 Fulfillment of Obligations
If the Agreement is terminated, neither party is released from their financial obligations to the other.
The second sentence of this section states that if the Agreement is properly terminated, neither
party can sue the other for damages.
The termination of this Agreement shall not otherwise release either party from its obligation to pay any
sum that may be then or thereafter owing to the other party nor operate to discharge any liability that had
been incurred by either party prior to any such termination. Except as qualified by the preceding
sentence, neither party shall, by reason of the termination of this Agreement, be liable to the other for any
damages (whether direct, consequential or incidental to and including loss of profit or prospective profits
of any kind) sustained or arising out of any such termination.
12.4 Effect of Termination & Survival
If [Manufacturer] is terminated, [Manufacturer] may sell the balance of its inventories, but that's
about it. With respect to the first insert, this sets the number of days after termination that an order
was scheduled to be shipped. If the order goes beyond that period, [Company] may cancel. The
second insert is a restocking fee that [Company] can charge to [Manufacturer] to take back products
upon termination.
Upon termination of this Agreement, [Manufacturer] may continue to dispose of its existing inventories
of products, but [Manufacturer] shall otherwise discontinue all further promotion, marketing, and support
of the products. Without limiting the generality of the foregoing, [Manufacturer] shall cease all display,
advertising, and use of all [Company] names, trademarks, logos, and designations and will not thereafter
use, advertise, or display any such names, trademarks, logos, or designations. Upon termination of this
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Agreement, the due date of all outstanding invoices for the products shall automatically be accelerated
and all such invoices shall become due and payable. All orders or portions thereof remaining unshipped
as of the effective date of termination may be canceled by [Company], at its option, to the extent they call
for delivery more than [000?] days after the date of termination. Upon termination of this Agreement,
[Company] shall have the option, exercisable at any time in its discretion, to repurchase some or all of
the entire remaining uncommitted inventory of the products held by [Manufacturer]. [Company] shall
pay [Manufacturer] for all products so repurchased (if received in a new and re-saleable condition) an
amount equal to the discounted price paid by [Manufacturer] to [Company], less a restocking charge of
[x]% percent of such price. Upon receipt of any products so reacquired from [Manufacturer], [Company]
shall issue an appropriate credit to [Manufacturer]'s account. Despite any termination of this Agreement,
the provisions in Sections 5.4 through 5.6, 7.4 through 7.9, 7.11 through 7.14, 8 through 12, and 14
through 15 shall remain in full force and effect.
This next section deals with the protection of certain proprietary information.
13. Confidential Information, Trademarks & Intellectual Property Rights
Both parties agree to keep the confidential or proprietary information confidential.
13.1 Confidentiality Regarding Proprietary Information; Retention of Property; Contract
Each party acknowledges that it may be furnished with or may otherwise receive or have access to
information or material that relates to past, present or future products, data, designs, development,
inventions, letters, notes, media, original artwork, creative notebooks, research, software, techniques or
technical information and, including various trade secrets like accounts, customer lists and information,
inventions, innovations, methods, marketing plans, pricing structure, payment histories, production
processes, records, and specifications. (The “Proprietary Information”). Each party agrees to preserve
and protect the confidentiality of the Proprietary Information and all of its physical forms, whether
disclosed to the other party before this Agreement is signed or afterward.
Both parties agree that neither will disclose or disseminate any such Proprietary Information or trade
secret information, directly or indirectly, or use any such information, for any purpose except for the
furtherance of the business contemplated by this Agreement.
Within three (3) days after the termination of this Agreement (or any other time at the other party's
request), a party shall return to the other party all such Proprietary Information that are in their
possession or under their control. Despite any other provisions of this Agreement, the requirements of
this Section shall survive termination of this Agreement.
The parties agree to preserve the confidentiality of the terms of this Agreement while it is in effect, and
thereafter. They may disclose its terms only to their attorneys, or tax preparers, and then only on the
condition that the attorneys, or tax preparers agree to preserve the confidentiality of this contract.
13.2 Protection of Information
Each party acknowledges that the Information is proprietary to the other party and has been developed as
a trade secret at their expense. Each party agrees that it will exercise the same efforts to hold and use
such Information in confidence (except as otherwise permitted by this Agreement) as it uses to protect its
own most confidential business information.
The previously stated obligations do not apply to any information that (1) is publicly known; (2) is given
to a party by someone else who is not obligated to maintain confidentiality; or (3) a party had already
developed prior to the day this Agreement is signed, as evidenced by documents. Neither party shall
retain, take or cause to be taken any physical forms of Proprietary Information (nor make copies of same)
without the other party’s written permission.
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The parties acknowledge their respective right to seek an injunction regarding the disclosure of
confidential information.
13.3 Right to Injunction
If any party shall attempt to use or dispose of any Information or any of its aspects or components or any
duplication or modification thereof in a manner contrary to the terms of this Section, the other -party
shall have the right, without the necessity of filing a bond or other security, in addition to such other
remedies that may be available to it, to injunctive relief enjoining such acts or attempts, it being
acknowledged that legal remedies are inadequate.
Whenever one party plans to mention the other party or this Agreement in a press release, it must
obtain the written permission of the other party.
13.4 Press Releases
No press releases or other like publicity or advertising of any nature regarding this Agreement that
mentions this Agreement or the other party by name shall be released by a party without the prior written
Agreement of the other party.
Make sure that Section 14.4 covers your trademarks in sufficient detail as it makes clear exactly
what [Manufacturer] can and cannot do with those trademarks.
13.5 Trademarks
[Company] shall have and retain sole ownership of the Trademarks, including the goodwill pertaining
thereto. Subject to [Manufacturer]’s compliance with [Company]'s standard cooperative advertising
policies, [Company] hereby grants to [Manufacturer] the right to use and display the Trademarks solely
in connection with and solely to the extent reasonably necessary for the marketing, Manufacturing, and
support of the products within the Territory according to the terms and conditions of this Agreement.
[Manufacturer] shall market, distribute, and support the products only under the Trademarks, and not any
other trademark or logo. [Manufacturer] shall not use the Trademarks or any other trademarks or trade
names of [Company] or any word, symbol, or design confusingly similar thereto, as part of its corporate
name, or as part of the name of any product of [Manufacturer]. [Manufacturer] shall not remove or alter
the products' copyright notices, trademarks, and logs, or packaging. To protect and preserve the goodwill
and image of the products, [Manufacturer] shall (1) conduct business in a manner that reflects favorably
at all times on the products and the reputation of [Company]; (2) avoid deceptive, misleading, or
unethical practices that are or might be detrimental to [Company], the products, Authorized Dealers, or
the public, including any disparagement of [Company] or the products; (3) make no false or misleading
representations with regard to [Company] or the products; (4) refrain from publishing or employing any
misleading or deceptive advertising material; and (5) refrain from making any representations,
warranties, or guarantees to Authorized Dealers or to the trade with respect to the specifications, features,
or capabilities of the products that are inconsistent with the literature distributed by [Company],
including all warranties and disclaimers contained in such literature.
13.6 No Copying
Without the prior written consent of [Company], [Manufacturer] shall refrain from copying, reverse
engineering, disassembling, decompiling, translating, or modifying the Products, or granting any other
person or entity any right to do so.
13.7 Notification
[Manufacturer] shall promptly notify [Company] of (1) any claims, allegations, or notification that its
marketing, licensing, support, or service of the products may or will infringe the Intellectual Property
Rights of any other person or entity; and (2) any determination, discovery, or notification that any person
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19
or entity is or may be infringing the Intellectual Property Rights of [Company]. [Manufacturer] shall not
take any legal action relating to the protection or defense of any Intellectual Property Rights pertaining to
the products without the prior written approval of [Company]. [Manufacturer] shall assist in the
protection and defense of such Intellectual Property Rights.
Section 14.7 makes it [Company]'s responsibility to defend [Manufacturer] in the event that a suit is
brought claiming an infringement.
13.8 Infringement
13.8.1 If notified promptly in writing of and given sole control of the defense and all related negotiations
and settlements, [Company] shall defend [Manufacturer] against any claim based on an allegation that a
product supplied under this Agreement infringes any United States Intellectual Property Rights.
[Company] shall pay any resulting costs, damages, and attorney fees finally awarded by a court with
respect to any such claims.
13.8.2 If the products in the inventory of [Manufacturer], or the Manufacturing or use thereof, become, or
in [Company]'s opinion could seriously be contended to be, the subject of such a claim, and if [Company]
cannot offer reasonable proof that such claim is without merit, [Manufacturer] shall permit [Company],
at [Company]'s option and expense, either to procure the right for [Manufacturer] to continue marketing
and using such products, or to replace or modify them so that they become non-infringing. If neither of
the foregoing alternatives is available on terms that [Company] in its sole discretion deems reasonable,
[Manufacturer] shall return such products on written request from [Company], in which event [Company]
shall grant [Manufacturer] a credit equal to the amounts paid by [Manufacturer] for such returned
products, provided that such returned products are in an undamaged condition.
13.8.3 Despite any other provision of this Section 9.5, [Company] shall not be liable to [Manufacturer]
for any claim arising from or based upon the combination, operation, or use of any product with
equipment, data, or programming not supplied by [Company], or arising from any alteration or
modification of products.
13.8.4 [Company] shall have no obligation to [Manufacturer] with respect to any infringement
involving or concerning the products except as stated in this Section 13.8.
14. General Provisions
The General Provisions that follow are fairly standard. These provisions enhance the balance of the
Agreement by explaining issues such as notice, assignment, legal remedies, waiver, and attorney
fees.
14.1 Independent Contractors. The relationship between both parties established by this Agreement is
that of independent contractors, and nothing contained in this Agreement shall be construed to give either
party the power to direct and control the day-to-day activities of the other. Neither party is an agent,
representative or partner of the other party. Neither party shall have any right, power or authority to enter
into any agreement for, or on behalf of, or incur any obligation or liability of, or to otherwise bind, the
other party. This Agreement shall not be interpreted or construed to create an association, agency, joint
venture or partnership between the parties or to impose any liability attributable to such relationship upon
either party.
You must decide which state governs this Agreement and where any legal action would be taken.
Generally, it is your (company’s) state of residence.
14.2 Governing Law & Jurisdiction. This agreement and the parties’ actions under this Agreement
shall be governed by and construed under the laws of the state of [State], without reference to conflict of
law principles. The parties hereby expressly consent to the jurisdiction and venue of the federal and state
courts within the state of [State]. Each party hereby irrevocably consents to the service of process in any
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such action or proceeding by the mailing of copies thereof by registered or certified mail, postage
prepaid, to such party at its address set forth in the preamble of this Agreement, such service to become
effective thirty (30) days after such mailing.
This Agreement is intended to be the only Agreement, and that no other documents or
communications are binding. Therefore, it is very important to make sure that everything [Company]
and [Client] have agreed to is included in this Agreement. Otherwise, it is as if it was not agreed to.
14.3 Entire Agreement. This Agreement, including the attached exhibits, constitutes the entire
Agreement between both parties concerning this transaction, and replaces all previous communications,
representations, understandings, and Agreements, whether verbal or written between the parties to this
Agreement or their representatives. No representations or statements of any kind made by either party,
which are not expressly stated in this Agreement, shall be binding on such parties.
Any changes to this Agreement must be in writing and signed by the party against whom that writing
is to be used.
14.4 All Amendments in Writing. No waiver, amendment or modification of any provisions of this
Agreement shall be effective unless in writing and signed by a duly authorized representative of the party
against whom such waiver, amendment or modification is sought to be enforced. Furthermore, no
provisions in either party’s purchase orders, or in any other business forms employed by either party will
supersede the terms and conditions of this Agreement.
All notices between the parties must be in writing and either delivered in person or by certified or
registered mail, return receipt requested.
14.5 Notices. Any notice required or permitted by this Agreement shall be deemed given if sent by
registered mail, postage prepaid with return receipt requested, addressed to the other party at the address
set forth in the preamble of this Agreement or at such other address for which such party gives notice
hereunder. Delivery shall be deemed effective three (3) days after deposit with postal authorities.
In the event of a lawsuit or any legal proceeding involving this Agreement, the losing party will have
to pay the winning party his or her costs and expenses, including reasonable attorney fees.
14.6 Costs of Legal Action. In the event any action is brought to enforce this Agreement, the prevailing
party shall be entitled to recover its costs of enforcement including, without limitation, attorneys’ fees
and court costs.
Legal remedies, i.e., money damages, may not be sufficient; therefore, both parties agree to
equitable remedies such as an injunction where the breaching party would be required to do or not
to do something.
14.7 Inadequate Legal Remedy. Both parties understand and acknowledge that violation of their
respective covenants and Agreements may cause the other irreparable harm and damage, that may not be
recovered at law, and each agrees that the other’s remedies for breach may be in equity by way of
injunctive relief, as well as for damages and any other relief available to the non-breaching party,
whether in law or in equity.
Assuming the parties wish to use Arbitration in the event of a dispute, the following section should
be included. You take your chances with an arbitrator, but it keeps legal costs down and keeps you
out of a drawn out legal process.
14.8. Arbitration. Any dispute relating to the interpretation or performance of this Agreement shall be
resolved at the request of either party through binding arbitration. Arbitration shall be conducted in
[County], [State] in accordance with the then-existing rules of the American Arbitration Association.
Judgment upon any award by the arbitrators may be entered by any state or federal court having
jurisdiction. [Company] and [Client] intend that this Agreement to arbitrate be irrevocable.
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Merely delaying to bring an action that one party has a right to bring does not cause that party to
lose or waive his right to pursue that action.
14.9 Delay is Not a Waiver. No failure or delay by either party in exercising any right, power or
remedy under this Agreement, except as specifically provided in this Agreement, shall operate as a
waiver of any such right, power or remedy.
Neither party will be blamed if there is a problem resulting from something beyond its control, such
as an earthquake, flood, war.
14.10 Force Majeure. In the event that either party is unable to perform any of its obligations under this
Agreement or to enjoy any of its benefits because of any Act of God, strike, fire, flood, governmental
acts, orders or restrictions, Internet system unavailability, system malfunctions or any other reason where
failure to perform is beyond the reasonable control and not caused by the negligence of the nonperforming party (a “Force Majeure Event”), the party who has been so affected shall give notice
immediately to the other party and shall use its reasonable best efforts to resume performance. Failure to
meet due dates resulting from a Force Majeure Event shall extend such due dates for a reasonable period.
However, if the period of nonperformance exceeds sixty (60) days from the receipt of notice of the Force
Majeure Event, the party whose ability to perform has not been affected may, by giving written notice,
terminate this Agreement effective immediately upon such notice or at such later date as is therein
specified.
This section limits the ability of either party to transfer any of its rights or delegate any of its duties to
third parties.
You want to make sure that you can sell your business along with all of the relationships you have
developed along the way. (Often these relationships can add tremendous value to your business
and you want to make sure that all of your agreements can be transferred to the new owners.) I
wouldn’t want to seek (let alone pay for) permission to sell my company.
Generally, neither party may assign their respective rights to a third party; however, with the possible
exception of assignment to a successor corporation or partnership, either party may transfer its
rights or obligations under this Agreement without the approval of the other party. This Agreement
would be binding on the 3rd party.
However, you may want to limit each other’s ability to pass along this deal to another possibly
unknown and possibly unfriendly entity. The second paragraph prevents unauthorized transfer of
responsibilities…
CHOOSE one or the other of these two following paragraphs.
14.11 Assignability & Binding Effect. Except as expressly set forth within this Agreement, neither
party may transfer or assign, directly or indirectly, this Agreement or its rights and obligations hereunder
without the express written permission of the other party, not to be unreasonably withheld; provided,
however, that both parties shall have the right to assign or otherwise transfer this Agreement to any
parent, subsidiary, affiliated entity or pursuant to any merger, consolidation or reorganization, provided
that all such assignees and transferees agree in writing to be bound by the terms of this Agreement prior
to such assignment or transfer. Subject to the foregoing, this Agreement shall be binding upon and inure
to the benefit of the parties hereto, their successors and assigns.
This paragraph DOES NOT ALLOW either party to transfer its rights to a successor company
without prior approval.
14.11 Non-Assignability & Binding Effect. Except as otherwise provided for within this Agreement,
neither party may assign any of its rights or delegate any of its obligations under this Agreement to any
third party without the express written permission of the other. Any such assignment is deemed null and
void.
____________________________________________________________________________________________
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If any part of this Agreement is unenforceable or invalid, the balance of the Agreement should still
be enforced. Basically, ignore any sections that are invalid.
14.12 Certain Sections Invalid. If any provisions of this Agreement are held by a court of competent
jurisdiction to be invalid under any applicable statute or rule of law, they are to that extent to be deemed
omitted and the remaining provisions of this Agreement shall remain in full force and effect.
The headings of the various sections are meant to explain or otherwise give meaning to those
sections; they are for convenience only.
14.13 Headings. The titles and headings of the various sections and sections in this Agreement are
intended solely for convenience of reference and are not intended for any other purpose whatsoever, or to
explain, modify or place any construction upon or on any of the provisions of this Agreement.
Even after the termination of the Agreement, the parties may still have certain responsibilities such
as keeping information confidential.
14.14 Survival of Certain Provisions. The warranties and the indemnification and confidentiality
obligations set forth in the Agreement shall survive the termination of the Agreement by either party for
any reason.
Understood, Agreed & Approved
We have carefully reviewed this contract and agree to and accept all of its terms and conditions. We are
executing this Agreement as of the Effective Date above.
[Company]
[Manufacturer]
______________________________________
[Owner/Founder]
______________________________________
[Manufacturer Officer]
______________________________________
Title
______________________________________
Title
____________________________________________________________________________________________
23
Exhibit A
Manufacturing Specifications
Xxx
Xxx
xxx
____________________________________________________________________________________________
24
Exhibit B
Trademarks
Xxx
Xxx
xxx
____________________________________________________________________________________________
25
Exhibit C
Customers
Xxx
Xxx
xxx
____________________________________________________________________________________________
26
Exhibit D
Initial Order
Xxx
Xxx
xxx
____________________________________________________________________________________________
27